Bombay Rayon challenges Sebi’s plea in Supreme Court

Bombay Rayon Fashions has moved the Supreme

Court (SC), challenging the Securities and Exchange Board of India (Sebi)’s decision to reject its plea seeking relaxation of warrant conversion norms. SC has now issued a notice to Sebi.

In March 2012, Bombay Rayon and promoter B R Machine Tools had requested Sebi to relax the strict enforcement of requirements under the issue of capital and disclosure requirements (ICDR) regulations. Bombay Rayon had requested Sebi not to forfeit upfront payment of about Rs 49 crores made by a promoter entity while issue of warrants, which weren’t converted into equity shares.

According to Sebi rules, 25 percent of upfront payment made at the time of issue of warrants stands forfeited, if the warrants are not converted. Sebi had rejected the company’s request for relaxation of norms. Later, the company had moved Securities Appellate Tribunal, which had dismissed its appeal in June 2013. In September 2009, about 10 million warrants of the company were issued to BR Machine. In the stipulated time frame, the promoter entity could convert only two million warrants into equity shares, while 7.5 million warrants couldn't be converted.

The promoter shareholding in Bombay Rayon had increased from 31.54 percent to 93.15 percent during December 2009 and December 2011 on the back of partial conversion of warrants and an open offer made to public shareholders.